The globalized economy is a colossal Ponzi Scheme in which the vast majority survive on the bread crumbs falling off the table. The possibility of 7 billion people achieving a consumption-oriented lifestyle is zero, so the World Bank conveniently set the poverty line at $1.25/day to legalize global slavery. As long as someone else's children are doing the suffering, it's "all good". Post-2008, this illusion was extended merely by plundering all future generations.

Wednesday, March 12, 2014

When A Butterfly Flaps Its Wings In The Ukraine

The Global Bank of Ponzi Doesn't Accept Withdrawals from Any BranchesI was thinking about investing massively in the Ukraine,

Then I realized, I already am...

How Soon They Forget

I've heard a few armchair "pundits" who say that the Ukraine situation is a relative non-issue to the world at large. I even quoted the one in Barrons from two weeks ago. Unfortunately, those who dispense that unfounded "wisdom" apparently have the attention span of a coked up flea. In the past three years, world financial markets have been in turn held hostage by Spain, Greece, and then Cyprus.

Soon a Seven-Eleven going tits up will require ECB intervention:

More to the point, Greece was the initial catalyst that led to the "Flash Crash" of May 2010 during which the Dow lost 9% within seconds and several million Baby Boomers filled their Depends.

"It was the second largest point swing, 1,010.14 points, and the biggest one-day point decline, 998.5 points, on an intraday basis in Dow Jones Industrial Average history"

Ukraine GDP is ~$325 billion so roughly the size of Greece, but that isn't really the main issue. Fast forward to March of 2013 when Cyprus, a country of a million people and GDP of a mere $25 billion caused global markets to sell-off due its own banking crisis. Once again the ECB had to step in and stabilize the situation.

Why would a U.S. market respond so negatively to such a small European event? Because there are now only two markets in Ponzi World: "Risk On" and "Risk Off".

Or in Minsky speak:

"the greater the weight of speculative and Ponzi finance, the greater the likelihood that the economy is a deviation amplifying system"

Leaving aside Cyprus which was quickly resolved with ECB intervention, there have been no significant "risk off" events of any size for two and a half years straight - since the Fall of 2011 after the U.S. debt downgrade fiasco - which tanked stocks and rallied Treasury bonds.

In Globalized Ponzi World, where literally every financial market and every economy outside of Cuba and Antarctica, is now inextricably linked, then ever more minor disruptions will cause "amplified deviation".

Caution: Over-Confident Buffoons Running Amok

So these abject buffoons on both sides threatening military consquences or at minimum economic and financial sanctions, don't realize they are playing with two types of WMDs - the explosive kind and the financial kind.

Given enough time, I am confident that the buffoons in leadership will inadvertently detonate the new Mega Financial Deathstar and thereby trigger the Dow Meltdown sequence, which is of course the mother of all Baby Boomer underwear soiling events.

Once the Dow comes down, then Crimea will look like a vacation destination by comparison, because it will unleash the pent up bearish social mood which has been artificially manipulated higher by Central Bank money printing via the Dow. Once social mood collapses, then there will be Crimea's all over the place.

As I said at the top of this post, we are all invested in Ukraine, whether we realize it or not. And in Kardashian-land most don't realize it, that's for damn sure.

Russian Stock MarketWhat about this ? Does this not matter either? This is a $2.7 trillion dollar economyDamn if we are not surrounded by some hardcore dumbfucks...